While working on registering your freelance business as an LLC in California, you need to establish that you have what’s known as an “agent for service of process” in the state. Never heard of this? Not a problem; we’ll explain.
As you read through the information below, please keep in mind that, while we’ve made every effort to ensure that this info is accurate and up-to-date, it doesn’t constitute legal advice, nor is it a substitute for legal advice. It’s always best to head to a professional attorney for personalized guidance on everything related to your LLC.
First Thing’s First: What Is a Registered Agent?
An “agent for service of process” is more simply referred to as a registered agent. This is an individual or a private service company that agrees to accept legal papers on your LLC’s behalf.
A registered agent will help you in various ways. As a few examples:
- In the event that your LLC is sued, your registered agent will accept court papers on your behalf.
- Your registered agent will also accept business registration renewal notices from the Secretary of State.
- Your registered agent will even be able to accept tax notices.
But, wait. Why can’t your LLC serve as its own agent and just accept all of these papers on its own? Well, the rules are simply that an LLC must designate a third party. It is what it is.
So, when you file your articles of organization with the California Secretary of State, you must designate your registered agent.
Keep in mind that, if your LLC registers to do business in any other states, you will also need a registered agent in each of those states as well.
Getting to Know Individual Registered Agents
What are the criteria that have to be met for an individual to be designated as your LLC’s registered agent?
First off, any adult over age 18 who lives in California can serve as your LLC’s registered agent. And, guess what, this actually doesn’t exclude you, the owner.
That’s right; you or any other owners of your LLC can choose to serve as the registered agent, and the address for the registered agent will be your business location.
Some other individuals that can serve as a registered agent for your LLC include:
- An employee
- Your lawyer
- Your spouse
- A relative
- A friend
- Any trusted individual you deem worthy of being your registered agent
Individual Registered Agent: Things to Consider
Most small businesses that have just 10 or fewer employees use individual registered agents because it could help you save money. But, before you choose who will be your registered agent, consider the following:
- The registered agent’s street address (not a P.O. box) must be listed in your LLC’s articles of organization. This is a public record, so the person’s address will be accessible to anyone. And, although this might not be a problem if you have an outside office, it might be problematic if you work at home and you’re planning on being your LLC’s registered agent. Privacy is important to everyone, after all.
- A registered agent must keep their address up-to-date with the Secretary of State. Failing to do so might result in misdelivery of important papers. And that would definitely be bad.
- Your registered agent must be available to accept papers during normal business hours 52 weeks a year. This could be tough to accomplish…vacation, anyone?
- A registered agent should expect to get quite a bit of junk mail delivered to their address. Major inconvenience, especially if you already deal with a lot of junk mail.
- An individual can only serve as a registered agent in the state where they live. So if you register your LLC in multiple states, you’ll need to assign someone else as your registered agent in every other state. This could take a lot of time and effort on your part.
Still think that you’d like to have an individual registered agent? Just be sure to ask them first. Make sure they agree to be your registered agent prior to designating them in your LLC’s articles of organization. After all, being a registered agent is serious business!
Getting to Know Private Service Company Agents
Thinking that an individual registered agent might not be the best choice for your LLC? Then your next option is designating a private service company.
Private service companies are those that are in the business of serving as registered agents for LLCs, corporations, and other businesses. And these companies must register as corporate agents for service of process with the Secretary of State.
In other words, these are companies that know how to be great registered agents for LLCs just like yours. They know what they’re doing, so you might be able to enjoy greater peace of mind. After all, being registered agents is their job.
Private Service Company Registered Agent: Things to Consider
A private service company can give you the assurance that they’re aware of what it takes to be an effective registered agent, but there are some pros and cons that you should consider before taking this route:
- These firms will charge an annual fee that typically ranges from $100 to $300. That could be a difficult expense to swallow for a burgeoning freelance business that has a lot of other costs to contend with. However, the fee is a tax deductible business expense, so that’s certainly helpful.
- In exchange for the annual fee, important papers that are sent to your LLC will be received and forwarded to you. Some service companies will even scan the papers that they receive for your LLC and make them available to you online. Now, that’s nice!
- A private service company might be willing to provide you with extra services, such as helping you with periodic filings that your LLC has to make to maintain its legal status. As an example, if you’re in California, every LLC has to file a Statement of Information with the Secretary of State every two years, so your registered agent can help you stay on top of this so you never fall behind.
Do you think a private service company might be the right type of registered agent for your LLC? You can try searching the California Secretary of State’s online list of private service companies, or you can do a standard internet search for “registered agent.” But this could all be time-consuming and frustrating, especially since you should also dive deeper to check what services they offer and what prices they charge for those services.
We Can Help You Get the Best Registered Agent for Your LLC!
Finding the perfect registered agent for your business could be a daunting process, as there are a lot of factors to consider. When you use Collective’s services to set up your business, though, we’ll help you with the whole registered agent thing, too. We’ll match you with the ideal registered agent whom you can trust, so you can have peace of mind that all of your LLC’s papers will be handled appropriately. Join Collective today to learn more about forming your LLC and choosing your registered agent with greater ease.
Stephen Fishman has dedicated his career as an attorney and author to writing useful, authoritative and recognized guides on taxes and business law for small businesses, entrepreneurs, independent contractors, and freelancers. He is the author of over 20 books and hundreds of articles and has been quoted in The New York Times, Wall Street Journal, Chicago Tribune, and many other publications. Among his books are Deduct It! Lower Your Small Business Taxes, Working with Independent Contractors, and Working for Yourself: Law and Taxes for Independent Contractors, Freelancers & Consultants.